November 24, 2025 • 39 mins
Chuck Zodda and Mike Armstrong discuss the AI bubble causing an 'everything bubble'. Blue Owl is the sum of all investors fears. Is the real poverty line $140,000? How spouses retiring at different times can avoid money clashes. Trump claims California's $20 fast food minimum wage hurts businesses. Is that true? An AI toy bear speaks of sex, knives, and pills, a consumer group says.
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Speaker 1 (00:00):
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(00:42):
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a donation today. This is the Financial Exchange with Chuck
(01:05):
Zadath and Mike Armstrong.
Speaker 2 (01:11):
Chuck Mike Tucker with you, and as we kick things
off here, we've got a whole bunch of green on
the board to start Thanksgiving week. Dow Jones Industrial Average
up about point seven percent, three hundred and nineteen points,
the S and P five hundred up eighty seven points,
about one to third percent, and the NASDAK composite uh up,
(01:32):
let's see, we've got yeah, about two percent, four hundred
and seventy six points. So we got all of the
major US indices, even the cute little Russell two thousand
up about one to quarter percent, so we got all
of them in positive territory. As we start the week,
US ten year Treasury down six tenths of a basis point,
not worth getting out of bed for that. It's at
four point oh five seven percent. Dollar Index a point
(01:57):
oh one percent. Those currency traders really well, you know,
making their money today. It's at one hundred point one
two five. We got gold up ten to seventy eight
ounce to four th ninety and twenty cents, and crude
oil West Texas Intermediate up eight cents a barrel to
fifty eight to fourteen. We do have a chance later
this week, though, to see the TRIPA national average four
(02:20):
gas prices get below three dollars a gallon. A bunch
of the refineries that have been closed recently have reopened.
Gas prices down four tenths of a cent in the
last week, but potentially some acceleration there right as you
head into one of the busiest travel weeks of the year.
So potentially some good news. If you are going to
be on the road in the next week or so,
(02:42):
you might see some gas a few cents cheaper than
it is today.
Speaker 3 (02:47):
I think one stock worthy of mention.
Speaker 4 (02:49):
Eli Lilly today became the first ever healthcare company to
cross the trillion dollar market cap threshold.
Speaker 5 (02:55):
I believe it's called the Quatro Commas Club.
Speaker 3 (02:57):
The Quatro Commas Club. I like that.
Speaker 5 (03:00):
It's not an original thought and it's stolen from Silicon Valley.
There's the Trace Commas Club, billion dollar club.
Speaker 3 (03:06):
There is the.
Speaker 5 (03:07):
Quatro Commas Club. It's not quite as you know, catching
as Trace Commas, but Quatra Commas.
Speaker 3 (03:12):
Sure we can make it work.
Speaker 4 (03:13):
Our appetite for weight loss drugs I like that pretty substantial.
Speaker 5 (03:18):
Yeah, yeah, how's that. Let's talk a little bit about
this piece from CNBC Tucky, do we have any like
dramatic music that you can play?
Speaker 3 (03:29):
You just hummet?
Speaker 5 (03:31):
Can you hum Kazoo? Uh?
Speaker 2 (03:34):
I don't know you got like any like Kazoo's doing
Star Wars or something like that, because that's kind of
what this this piece is.
Speaker 5 (03:41):
Could markets be facing in everything bubble? Investors are divided?
Speaker 3 (03:47):
Yeah?
Speaker 5 (03:47):
Gee, with a topic like that, how could you not
be divided? How would we define in everything bubble? Michael?
Speaker 4 (03:54):
I don't know because last time I checked, tulip prices
still pretty reasonable compared to the four teen hundreds or
whatever that tulip bubble was.
Speaker 5 (04:02):
Was it the fourteen hundreds whenever?
Speaker 4 (04:06):
So I mean, like I feel like when we're talking
about like we're not having a we're not having an
everything bubble.
Speaker 3 (04:12):
Everything bubble would mean everything.
Speaker 5 (04:14):
Like am I in a bubble?
Speaker 2 (04:15):
Like I feel like I'm Austin Power's like, help, I'm
in a nutshell?
Speaker 1 (04:18):
Like?
Speaker 5 (04:19):
Is that me in a bubble?
Speaker 3 (04:20):
Right now? Like?
Speaker 4 (04:21):
Sixteen thirty six, by the way, was the Dutch tulip bubble?
I was off by two hundred years, So.
Speaker 3 (04:25):
It is pretty bad. I'm sorry.
Speaker 5 (04:27):
How is this piece even defining everything bubble?
Speaker 3 (04:33):
Real?
Speaker 4 (04:33):
Estate, crypto, artificial intelligence, stocks, every other stock. But again,
like if you want to go through the five hundred
companies in the S and P five hundred, I do
think you will find a few of them at least
that are reasonably priced compared to their long term average.
So no, I don't think we're in an everything bubble.
Speaker 5 (04:53):
So let's just knock off a few of these just
right off the bat. Housing is not a bubble. The
prices are unaffordable.
Speaker 3 (05:02):
That does make it a bubble.
Speaker 5 (05:04):
Bubble implies that it has to pop in a kind
of violent fashion, and I just don't see that happening
with housing. I could see like some sideways drift for
a few years, But just because something's unaffordable doesn't make
it a bubble. The next one that I want to
address is crypto. If the default state of something is
(05:26):
a bubble, can it ever actually be in a bubble?
Because this is what crypto does. It goes through these
massive run ups for a couple of years, then massive
draw downs, then massive run ups like that's just the
state of nature with it, Like you wouldn't you know,
get upset at a cheetah for chasing the gazelle? Do
(05:47):
you get upset at crypto for going up and down crazily,
since it's not tethered to anything real.
Speaker 4 (05:55):
No, I'm just trying to think if there's been any
other asset class similar to it in that way, but
I ruggle to think of one. I'm sure there's some
emerging market countries stock prices that have seen something similar,
but I hesitate to come up with it.
Speaker 5 (06:07):
So like crypto, I just like, except hey, it's gonna
have crazy swings. Some of them are up, some of
them are down. It can't be a bubble because there
is no intrinsic value, there's no earnings per share.
Speaker 4 (06:18):
Investors aren't divided on this subject from which perspective that.
Speaker 3 (06:22):
We're in in everything bubble? They're not.
Speaker 4 (06:24):
No, the same as is saying that they're divided. But oh,
investors are not divided on whether or not we are
in a everything bubble.
Speaker 3 (06:32):
No.
Speaker 4 (06:32):
Investors right now are concerned that we may be in
an artificial intelligence and related companies bubble.
Speaker 5 (06:39):
We could be in a something bubble, but not in
everything bubble.
Speaker 3 (06:42):
Yeah, I mean, am I missing something here? No?
Speaker 4 (06:46):
Like yeah, bond prices, I guess a lot of different
asset prices have inflated, but that is very typical of
a period of time where you've seen dramatic stock price appreciation.
Like the junk to treasury yield spread is pretty narrow,
meaning people are not pricing in a whole lot of
risk for junk bonds. Does that mean that it's a
(07:10):
bubble like nothing we've ever seen, as the everything bubble
term would insinuate, I don't. I don't even fundamentally understand
what this means and what people would be divided by.
Speaker 5 (07:20):
I don't feel even that we are more bubblicious than
we were at the end of twenty twenty one. As
an example, like yes, in terms of scale, if AI
turns out to be a horrible, you know, a horribly
bad allocation of capital from a scale perspective, it would
(07:40):
dwarf anything else that we've seen.
Speaker 4 (07:43):
It's a really good point, Chuckley. Just think back to
twenty twenty one. It did feel more ludicrous than at
least it to twenty twenty five. There is a narrative
to attach to the fantastic prices that we are seeing everywhere.
Speaker 5 (07:58):
Something Austin could come out of.
Speaker 4 (08:00):
In twenty twenty one, there was nothing. It was just
we have too much money, and we are willing to
gamble on anything from South Korean baseball to meme stocks.
Speaker 2 (08:10):
You want to push a truck down a hill, there's
a stock for that you want to you know, like again,
a lot of them.
Speaker 3 (08:18):
Back Mania, like all of that stuff.
Speaker 4 (08:21):
There was no semblance of any I guess the best
argument you could have was that EV's were going to
be like seventy percent of the world's fleet of cars.
Speaker 5 (08:29):
But even there, like you and I had these conversations
in twenty one where we said, guys, there's a reason
why no one starts car car companies. They are literally
money pits. Yeah, it's a hole that you dig in
the ground, you put all of your money into it,
and there's like a one percent chance that you get
(08:50):
any of it back. And it's like, it was very
obvious that you couldn't actually make that much money on
EV's on artificial intelligence, there's a non zero chance that
you can't make any money on it. Hold on, there's
there's a real chance.
Speaker 3 (09:10):
Chance that you can make no money.
Speaker 5 (09:11):
There's a chance you can make no money on it. Sure,
but I do acknowledge, Hey, if you can actually do
some of the things that you're talking about. Sure, it's
a multi trillion dollar market.
Speaker 3 (09:22):
Yep.
Speaker 5 (09:23):
And so I understand why you somewhere between the car
companies made no sense yea, And we said it at
the time. It's like, guys, who's gonna buy all this stuff?
Speaker 3 (09:33):
Right?
Speaker 5 (09:34):
This It's kind of like, Yeah, if you could actually
invent a robot that you know, you can sell for
x thousands of dollars and it does all of your
household chores for you, I could see the market for that.
Speaker 3 (09:47):
Yeah.
Speaker 4 (09:47):
If you have an artificial intelligence that is so good
at gleaning data that it allows you to come up
with new drug combinations to treat diseases that we can't
currently figure out use for that, wow, yeah, that could
be a huge market.
Speaker 3 (10:00):
Look at what we're seeing already with weight loss drugs.
Speaker 4 (10:02):
Imagine if it could do stuff with other things because
of artificial intelligence being better at this than the current
tools we have.
Speaker 5 (10:09):
So if you've got to roll backs at least story
eight hammers at once and finish a house in a day, yep. Okay,
Like I get the use for that. In twenty twenty one,
it was just like all insane stuff. This stuff might
end up being not real, but you understand the draw
to this in a better way than just hey, like,
(10:33):
here's I mean, what wasn't twenty twenty one when stuff
like dose coins started and it was just like, yeah,
here's a picture of a dog. Yeah, on like a meme.
Speaker 4 (10:42):
Coin or what were the uh art artwork, the digital artwork?
Speaker 3 (10:47):
NFTs?
Speaker 5 (10:48):
Oh yeah, there was the NFT peak. Yeah, but I
mean the counter to this is like you got la
boo boos now or is it labu boos, la boo boos,
la boo boos?
Speaker 3 (10:57):
Yeah, yeah, yeah, boh.
Speaker 5 (11:01):
It's hard to like, I put this in a different
bucket from twenty one because twenty one was just a
bunch of things untethered from reality. This is a bunch
of things that may change reality. We're just not sure if.
Speaker 3 (11:12):
They will yet.
Speaker 5 (11:13):
Let's take a quick break when we come back, let's
do a little bit of trivia and are we gonna
do blue Owl or they affordability crisis?
Speaker 3 (11:22):
Michael?
Speaker 5 (11:24):
Why not both? Right after this?
Speaker 1 (11:27):
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Uh?
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Speaker 5 (13:20):
I guess the headline writers are just pulling out all
the stops today. We got this one from Bloomberg. Blue
Owl is the sum of all investor fears. Okay, so
here's the deal. Blue Owl is an asset manager. They
managed about three hundred billion dollars.
Speaker 3 (13:35):
I was gonna say that, isn't that the name of
a famous movie.
Speaker 4 (13:37):
It was the Faust movie, a famous famous book, right,
some of all for Ben Affleck.
Speaker 3 (13:42):
Yeah, yeah, I think it's sucked Tom Clancy.
Speaker 5 (13:44):
Okay, it's a very c plus Tom Clancy movie. Like,
there's much better ones if you want to go like
clear in Present Danger or something like that. Anyways, I
digress blue Owl. They manage about three hundred million dollars.
About half of that is in the private credits space,
which basically means that they make loans to companies that
are not through public facing bond markets. And I'll just
(14:07):
quote here from Bloomberg because I do think they actually
sum it up well. Blue Owl Capital has caught into
trifective market worries about private credit, artificial intelligence, and the
flightiness of wealthy individuals who have been the new growth
hope for alternative managers in recent years. The reason why
that last one matters typically private credit space kind of
the exclusive domain of pension funds insurers, but made.
Speaker 3 (14:30):
It more money. So where do they go?
Speaker 5 (14:32):
They said, yes, we want to, you know, start tapping
you know, wealthy individuals, same way that private equity firms
have and hedge funds and so on and so forth,
and now they're trying to put it into your four
O one k. Ultimately, what we have here is a
question of do the companies that Blue Owl and subsidiaries
(14:52):
and other people have lent to do those companies have
enough money to pay back the debt they've taken out Right,
There have been a couple of high profile ins instances
where firms funded by private credit have not been able
to in recent months, mostly in the auto sector, but
there was one in the housing sector as well. And
so you've kind of got this drum beat out there
(15:12):
where no one's quite sure what all this stuff is worth.
It's compounded by a couple of other bankruptcies in the
defaults in the last month or so in this space
where companies were having their loans fully valued by their
issuers right up until the day when they said, nope,
you can't pay anything, and we're actually going to write
(15:33):
this down to zero.
Speaker 4 (15:34):
Right, So you can to some degree understand the frustration
by the CEOs in this space. At Blue Owl, for instance,
the average annualized credit losses are running at zero point
one three percent of total loans, and so one of the.
Speaker 3 (15:48):
CEOs is out there. They have co CEOs at Blue Owl,
and you know.
Speaker 4 (15:51):
Kind of giving these exasperated speeches of why did the
narrative turn here?
Speaker 3 (15:55):
There's no real problem, YadA.
Speaker 4 (15:57):
YadA also acknowledging for a moment that his company only
works if they do have a market to continue to
lend out new money and buyers for that debt. So
he's got some in vested interest in making sure that
this gravy train continues. But to his point, there have
been very few defaults in this space. There is you know,
generally no aggregate looming issue, but when you have for
(16:24):
really public defaults, and it can quickly change the narrative
over to this being a real problem. And so, as
we said before, it's going to take some time to
kind of figure out. But for some time, these companies
have been claiming to their investors and to the general
public that they are just much better at underwriting than
(16:47):
previous issuers of this type of debt. And I think
that that statement has been called into question with some
of these big defaults that Blue Owl, by the way,
wasn't really connected to in any way.
Speaker 5 (16:58):
No, I think here's the question that I think is
worth asking. Then, if you're actually that good at underwriting
this debt, and if the default rate is that low,
then why are the interest rates that are charged to
the companies borrowing through private credit markets in the low
double digits right now? Because if there really isn't that
(17:21):
much risk in them, then why do you have to.
Speaker 4 (17:25):
Underwrite money of borrowers willing to Why were plenty of lenders?
Speaker 5 (17:28):
Why will more lenders lend to these companies at seven
eight nine percent instead of twelve thirteen fourteen percent. That's
the one that's out there and that I have a
hard time getting my head around, which is, yeah, if
it's really if you're really that good at it, why
is the market pricing it as if it's still kind
of junkie debt.
Speaker 4 (17:49):
I don't think you're a monopoly. You're not the only
place that can go lend out money to small borrowers.
Speaker 5 (17:53):
No, there's dozens of these companies that do this. You know,
even at this scale, there's there's dozens of these companies
that do this. Everyone's talking about the affordability crisis. It
can't be solved. I agree with this piece from Greg Yep.
The tools that governments use in order to manage their
constituencies or either's local, state, or federal level. We do
(18:18):
not have tools to make things more affordable. No, we don't,
and I take it back, we do. The tool to
make things more affordable is competition and allowing companies to
have to compete on price in order to make things
(18:38):
more I was going to say, or raise wages, which
makes things more affordability.
Speaker 4 (18:42):
Is a contributing factor of two things, prices and wages. Yes,
and I would argue trying to lower prices or hold
them where they are can't do. It is a hell
of a lot more difficult than trying to create conditions
under which wages can increase.
Speaker 5 (18:55):
Competition raises wages and lowers prices because you have to
compet for labor and you have people that you're competing
against on price.
Speaker 3 (19:04):
But it's easy to get confused about that.
Speaker 4 (19:06):
And so we're going to probably test some of the
dumb policies that we've had before, such as twenty dollars
fast food minimum wages, and rent control and all sorts
of fun things which I heard, by the way, is
making it onto the Massachusetts ballot some rent control measures
here in the States. So exciting news to come.
Speaker 5 (19:24):
Let's take a quick break.
Speaker 2 (19:25):
When we come back, we've got Wall Street Watch, We've
got the trivia answer, and then we'll discuss whether the
real poverty line is one hundred and forty thousand dollars
in income.
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Speaker 1 (20:20):
Time now for Wall Street. Watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (20:32):
All after last week's shoppy ride, markets are beginning the
holiday shortened week well into positive territory as traders away
more economic data releases, including the Producer Price Index in
retail sales. Right now, Dow is up over half a percent,
or two hundred and sixty points, SMP five hundred is
up one point four percent or ninety one points, Nasdaq
(20:55):
surging two point three percent higher or five hundred and
seventeen points, RUSTED to two thousand is up nearly one
and a half percent, Tenure Treasure realed is flat at
four point zero five four percent, and crude oil up
about half a percent, treading just above fifty eight dollars
a barrel test. The CEO Elon Musk posted t X
(21:16):
that the company has started work on the next generation
of AI chips to be used in cars and data center,
sending Tesla shares up by seven percent. Now sticking with
AI where Alphabet stock is rallying nearly five percent following
glowing reviews of its recently launched Gemini three AI model. Meanwhile,
Ali Baba stock is almost five percent higher after the
(21:38):
company announced its AI app Quinn, had ten million downloads
within its first week of launching. Elsewhere, Nova Nord Disk
shares sinking about six percent after the pharmaceutical company said
it's highly anticipated trial for Alzheimer's disease failed to meet
its main goal and struggling retailer Coals named Michael Bender
as its new CEO, marking the third CEO the department
(22:01):
store has had in the last three years. Bender has
been serving as the company's interim CEO since May. Colestock
is now edging higher. I'm Tucker Silva and that is
Wall Street Watch. And in the previous segment we asked
you the trivia question who was the first drummer of
the Beatles? Well, that would be Pete Best and our
(22:23):
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the Financial Exchange Show t shirt. Congrats to John, and
we played trivia every day here in the Financial Exchange
See complete contest rules at Financial Exchange Show dot com.
Speaker 5 (22:37):
All right, Mike, we have to have a conversation about
the federal poverty line.
Speaker 3 (22:43):
Yeah, we might need to find.
Speaker 4 (22:46):
What poverty actually means as part of this, but the
federal government does produce a level of income where you
are considered impoverished.
Speaker 5 (22:56):
Yes, and that uh, basically that limit if you look
at it, it varies based on family size, as you
would expect. Sure, if you are a just single individual
living on your own, it's below fifteen six hundred and
fifty dollars this year. If you have if you're married
or it's two of you living together, it's about twenty
(23:16):
one thousand. If you have twelve kids, it's about eighty
seven thousand. Not many twelve kid households these days, so
it's probably in the minority. But basically the federal poverty
line is it's defined basically so as to you know,
have it's the minimum income level to meet some basic
(23:38):
needs such as food, housing, and healthcare and it gets
updated annually.
Speaker 4 (23:43):
And not coincidentally, the federal minimum wage at seven dollars
twenty five cents per hour, if you worked a full
forty hour week for fifty two weeks a year, would
get you about fifteen thousand dollars in income.
Speaker 5 (23:54):
So there is a manager at Simplify Asset Management by
name of Mike Green. I'm familiar with Mike's work, and
I think he's generally a pretty sharp guy actually, but
he basically looked at a bunch of different data points
and said, no, if we're actually looking at what this
(24:17):
you know should be defined as that limit is closer
to one hundred and forty thousand dollars, and I just
don't think that that holds up when you, you know,
actually look at this.
Speaker 4 (24:30):
I am willing to say that at thirty thousand dollars
a year, which is that's the level for the family
of four, right was around thirty.
Speaker 5 (24:38):
Uh yeah, for let me pull it up for thirty
Oh yeah, it's thirty thirty two thousand.
Speaker 4 (24:43):
I'm willing to say that even under forty or fifty
thousand dollars in most parts of the country, as a
family of four, you are impoverished at levels of income
higher than thirty two thousand dollars, I'm really not willing
to get to the one hundred and forty thousand dollars level.
Speaker 5 (24:56):
No, And here's why, in my opinion, it doesn't make sense. First, like,
you look at the stuff that is included in here,
and just as an example, thirty two thousand dollars a
year for childcare. There is no world in which that
is what you need to spend on childcare year after
(25:18):
year after year.
Speaker 4 (25:21):
Likewise, if you are spending if you are earning thirty
two thousand dollars a year in income, there's almost no
way that you are choosing to engage a childcare provider.
Speaker 5 (25:32):
Correct, you will just stay alone and not work. Twenty
three thousand, two sixty seven for housing. That's two thousand
dollars a month in rent. I can tell you in
some parts of the country it's going to be really
hard to find a place for under two thousand a
month in rent. In large swaths of it, you can
absolutely find a place for under two thousand dollars a
(25:52):
month in rent. Fourteen seven hundred and seventeen for food,
And again this was looking at a family of four
about one thousand dollars twelve hundred dollars a month, we'll
call it, so about three hundred dollars a week. Guys,
I gotta tell you, I do my grocery shopping for
my family every single week, and without like, without having
(26:14):
to manage things tightly, and we're a family of four,
we're generally right around that level. If I wanted to
actually like coupon clip and bargain hunt and really do
some work on it, I could get that down by
at least thirty percent.
Speaker 3 (26:31):
In either case.
Speaker 4 (26:32):
And by the way, I'm taking Massachusetts data here as
an example for a four person household. If you're earning
less than fifty two hundred dollars a month, then you
qualify for SNAP benefits. And so we have some you know,
government intervention here that's confusing this matter further.
Speaker 5 (26:48):
Another one fourteen and twenty eight for transportation. Guys, I
can tell like, again, this might be the average spending
that you see out there, because again this was national
average data. Below the national average is not poverty. There's
another like line before you get there, ten thousand dollars.
Speaker 4 (27:07):
By the way, that fourteen thousand number is one absolutely
impacted by you know, the average price for a new
car correct which.
Speaker 5 (27:16):
Or even a car in general, there are like, there
are plenty of ways to get transportation in many parts
of the country that don't involve buying a new car.
It might be as simple as a bus pass free,
you know, each month. That might be a couple hundred
bucks or something, or a train pass each month for
a few hundred dollars, like you, it does not have
to be fourteen fifteen thousand dollars for transportation ten thousand
(27:41):
for healthcare. Like honestly, no one knows the cost of healthcare.
I'm not going to put up a fight there if
you want to tell me that that's you know what
it is when you include all your deductibles and out
of pocket and this and that.
Speaker 4 (27:49):
I'll say that according to Fidelities annual study that they
do on retirees, that a single individual who's retired is
expected to spend some six thousand plus dollars a year
you're on healthcare, So it wouldn't surprise him buy that
that ten thousand dollars for a family of four would
be the kind of bare minimum.
Speaker 5 (28:06):
And then you know, twenty two thousand for other essentials.
I'm guessing that's, you know, clothing, and I don't know
how you get to twenty thousand for other essentials like.
Speaker 3 (28:17):
That.
Speaker 5 (28:17):
Seems like a lot for essentials.
Speaker 3 (28:19):
Yeah.
Speaker 5 (28:21):
In any case, if we want to make an argument, hey,
the federal poverty line for a family of four should
be fifty thousand instead of thirty, I think we can
have a reasonable conversation there. One hundred and forty thousand,
I don't think we can have a reasonable conversation.
Speaker 4 (28:39):
Yeah, seems a little bit off. It does remind me
of a point, though, Chuck, that I know you and
I have talked about at length, which is there's always
in everyone's circle like keeping up with the Joneses mentality,
and we see that expense.
Speaker 3 (28:55):
Creep with clients that we work with all the time.
Speaker 4 (28:58):
And I've said this publicly a few times, where I
have met families who are pulling in half a million
dollars or more and are in terrible financial health. They
don't save anything, they rack up debt, they are not
going to save enough to retire on. And I've met
families that have earned at most one hundred thousand dollars
(29:21):
a year and are in excellent financial health without long
term debt without credit card debt, and enough savings in
the retirement to afford their lifestyle. And that's where it
comes down to that discipline and that understanding of what
your future is going to look like to save properly
for that future. If you are trying to assess where
you are in that saving journey that we all have
(29:45):
to embark on in our working years, and you're trying
to figure out, Hey, what is my dollar amount that
I need to get to.
Speaker 3 (29:50):
What is my age that I need.
Speaker 4 (29:52):
To get to before I can afford to pull back
from work and retire and live comfortably for the rest
of my life. That's what Armstrong Advisory Group does every
day when working with our clients. If you have those
types of questions, I urge you to call us at
eight hundred three nine three for zero zero one and
get your free financial check up. The number again for
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(30:14):
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Speaker 1 (30:15):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal or tax advice. Consult
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Speaker 5 (30:31):
Let's see, I kind of like this piece here how
spouse is retiring at different times can avoid money clashes
because I've seen this first hand. Actually with you have
a couple who you know, someone seventy five, someone is
sixty two in the relationship, and the seventy five year
old is quite literally in some cases, being like, hey,
(30:54):
I'm gonna die soon. We got to spend some money.
Speaker 3 (30:57):
Yeah, And the sixty two.
Speaker 5 (30:58):
Year old is like, I might have third so you're
forty years left. I don't want to be broke.
Speaker 4 (31:03):
Yeah, the you have to be Look, it's not to
interject myself into spouses into a couple's life, but there
are added risks when you are i would say, marrying
somebody that is greater than five years your age difference. Yeah, right,
Like you think about that example, and I've seen it before. Right,
(31:25):
the older spouse has a pension. How much homework did
you do to make sure that there's a survivor benefit
on that pension or if they were the primary income
earn or when their social Security goes away, that I'm
going to have something left over. It's a little bit
easier these days with investments making up a larger portion
of it. Sure, but there's a lot of those types
of questions that don't apply to a couple that's both
(31:47):
turning sixty five the same year. The other one that
I always ask people when there's an age difference and
somebody's retiring, it's how comfortable are you, uh, with seeing
your spouse.
Speaker 3 (31:59):
Not go to work every day?
Speaker 4 (32:01):
Because that's a that's a challenge when that spouse is,
you know, heading to the golf course or spending time
with the grandkids and you can't because you're commuting to work.
Speaker 3 (32:08):
It's a real pain point in some relationships.
Speaker 5 (32:11):
Oh, I mean I never went through that, but I
can tell you it as like a twenty five year
old you know, a couple of roommates at the time,
and one summer they both got into business school and
took the summer off and I'm still working. I'm kind
of looking at them and I'm like, they're literally just
like going and again, like hanging out at the beach
day and I'm sitting there, I'm like, guys, I don't
(32:35):
think we can do this long term. This isn't gonna work,
So yeah, I can. I can relate to that a
little bit. Just take a quick break when we come back.
Stack Roulette.
Speaker 1 (32:44):
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Speaker 5 (34:03):
Mike, what do you got for stack roulette?
Speaker 4 (34:05):
I keep seeing all these pieces about the California twenty
dollars fast food minimum wage law and people trying to
study the effects. The California fast food minimum wage law,
if you're not familiar, applies to any fast food company
that maintains at least sixty restaurants, so pretty much all
of them past in twenty twenty three, went into effect
(34:27):
in April of twenty twenty four, and so like.
Speaker 3 (34:31):
As early as.
Speaker 4 (34:31):
January this year, I started seeing pieces like, oh, this
is how many jobs. Yeah, the new minimum wage law
has killed. I do suspect it is going to kill jobs.
You can't measure it yet, it's not long enough. You
have to give a time to actually be measured. There's
been some studies, you know, showing that there hasn't been
any spillover to other industries. I find that to be
(34:53):
pretty useless as well. Basically saying that you know, it
hasn't driven up wages at full service restaurants. The only
thing that they've able to been able to distinguish so
far is that workers at these restaurants there seems to
be less turnover. Unsurprising, Yeah, but I do suspect. Yeah, overall,
five years from April of twenty twenty four, will there
(35:15):
be fewer fast food workers per dollars spent on fast food? Absolutely,
But again you have to measure these things in an
intelligent way, because it's not if the population of California
goes up another ten percent between now when you measure it,
there could still be more workers and fast food in
spite of the new law.
Speaker 5 (35:33):
I want to talk about this piece that Tucker dug
up from the New York Times, and Ai toy Bear
speaks of sex knives and pills at Consumer Group warns, Okay,
we've ordered them for the entire the Christmas gifts, Yes,
Christmas gifts for the entire production staff.
Speaker 3 (35:49):
How much of these things cost?
Speaker 5 (35:50):
Could they ninety nine dollars?
Speaker 4 (35:52):
Okay, so it's not it's gonna be a little bit
too expensive for you guys to afford for a trivia
contest winner.
Speaker 1 (35:56):
Huh.
Speaker 5 (35:57):
But here's the thing, Like, we got a couple things
to talk about this, starting with the fact that one
of these toys, it's a plush rocket with the removable speaker.
Speaker 4 (36:06):
It's called grock and it's designed for kids age three
to twelve.
Speaker 5 (36:10):
I'm sorry, we got to stop naming everything grock. That
is artificial intelligence. There's at least four platforms that I
know of, including this, that are using it. So it's
Elon Musk's so Elon Musk has one.
Speaker 2 (36:21):
There's another AI platform, there's this, and there's another toy
that I forget what it does.
Speaker 5 (36:27):
But here's the deal you got, Like, if all of
you are gonna name your toys groc and all your
platforms grock, you're basically proving that there is no real
creativity and artificial intelligence because you're literally just pulling a
term from a Robert Heinland novel and using it as
your own because you have no originality. Yes, so grow
(36:48):
up or do better either. One beyond that, if your
AI plush toy, you know, starts talking to kids about
you know, taking pills, knives and sex and stuff like that,
you probably haven't done enough work to make sure that
it's actually.
Speaker 4 (37:08):
Good I'll go a step further and say, parents, if
you are buying your three to twelve year old an
AI based toy, don't you are idiots? I'm no, no, Okay,
this technology came out a year ago, nobody has any
idea what it means. No, I'm gonna step up here,
(37:29):
chuck and say you should not be giving your minor
children access to a new piece of technology that everyone
seemingly understands the potential downsides of. It's true, like in
nineteen it's not like this is something that we have
no science fiction history about.
Speaker 5 (37:47):
It's true.
Speaker 2 (37:47):
In nineteen eighteen, you would have been like, hey, kid,
here's your first car.
Speaker 4 (37:51):
Like you know, yeah, I'm willing to go out on
a limb on this one. Bad parenting if you're buying
this thing for your kids. Yeah, it's probably not a
perfect parent over here, but I have some guardrails in place.
Speaker 5 (38:07):
So it's true. You probably don't want to buy a
completely untested technology toy for your kid, for your minor
child at age five.
Speaker 3 (38:16):
You know.
Speaker 4 (38:16):
It's like if you have a conversation with sixteen year
olds when we got there, all right, Yeah, it's I'm
a big believer.
Speaker 5 (38:23):
Once you get into your teens, like you basically should
like let them figure out anything that they need to
because like they're going to be, you know, going out
of the house soon. But yeah, at age five, I
could see how maybe a hard no is is warranted
on this. That's that's that's fair. Let's take a quick
break for the rest of the day.
Speaker 2 (38:40):
Dow was up two hundred and thirty points, S and
PS up eighty eight, NASDAG up five forty eight, stretching
its legs.
Speaker 5 (38:45):
We'll stretch ours too, and we'll see you tomorrow.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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Armstrong and Money Matters Radio do not compensate each other
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Exchange with Chuck Zada and Mike Armstrong, your exclusive look
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(00:42):
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heroes by visiting dav five K DOC Boston and making
a donation today. This is the Financial Exchange with Chuck
(01:05):
Zadath and Mike Armstrong.
Speaker 2 (01:11):
Chuck Mike Tucker with you, and as we kick things
off here, we've got a whole bunch of green on
the board to start Thanksgiving week. Dow Jones Industrial Average
up about point seven percent, three hundred and nineteen points,
the S and P five hundred up eighty seven points,
about one to third percent, and the NASDAK composite uh up,
(01:32):
let's see, we've got yeah, about two percent, four hundred
and seventy six points. So we got all of the
major US indices, even the cute little Russell two thousand
up about one to quarter percent, so we got all
of them in positive territory. As we start the week,
US ten year Treasury down six tenths of a basis point,
not worth getting out of bed for that. It's at
four point oh five seven percent. Dollar Index a point
(01:57):
oh one percent. Those currency traders really well, you know,
making their money today. It's at one hundred point one
two five. We got gold up ten to seventy eight
ounce to four th ninety and twenty cents, and crude
oil West Texas Intermediate up eight cents a barrel to
fifty eight to fourteen. We do have a chance later
this week, though, to see the TRIPA national average four
(02:20):
gas prices get below three dollars a gallon. A bunch
of the refineries that have been closed recently have reopened.
Gas prices down four tenths of a cent in the
last week, but potentially some acceleration there right as you
head into one of the busiest travel weeks of the year.
So potentially some good news. If you are going to
be on the road in the next week or so,
(02:42):
you might see some gas a few cents cheaper than
it is today.
Speaker 3 (02:47):
I think one stock worthy of mention.
Speaker 4 (02:49):
Eli Lilly today became the first ever healthcare company to
cross the trillion dollar market cap threshold.
Speaker 5 (02:55):
I believe it's called the Quatro Commas Club.
Speaker 3 (02:57):
The Quatro Commas Club. I like that.
Speaker 5 (03:00):
It's not an original thought and it's stolen from Silicon Valley.
There's the Trace Commas Club, billion dollar club.
Speaker 3 (03:06):
There is the.
Speaker 5 (03:07):
Quatro Commas Club. It's not quite as you know, catching
as Trace Commas, but Quatra Commas.
Speaker 3 (03:12):
Sure we can make it work.
Speaker 4 (03:13):
Our appetite for weight loss drugs I like that pretty substantial.
Speaker 5 (03:18):
Yeah, yeah, how's that. Let's talk a little bit about
this piece from CNBC Tucky, do we have any like
dramatic music that you can play?
Speaker 3 (03:29):
You just hummet?
Speaker 5 (03:31):
Can you hum Kazoo? Uh?
Speaker 2 (03:34):
I don't know you got like any like Kazoo's doing
Star Wars or something like that, because that's kind of
what this this piece is.
Speaker 5 (03:41):
Could markets be facing in everything bubble? Investors are divided?
Speaker 3 (03:47):
Yeah?
Speaker 5 (03:47):
Gee, with a topic like that, how could you not
be divided? How would we define in everything bubble? Michael?
Speaker 4 (03:54):
I don't know because last time I checked, tulip prices
still pretty reasonable compared to the four teen hundreds or
whatever that tulip bubble was.
Speaker 5 (04:02):
Was it the fourteen hundreds whenever?
Speaker 4 (04:06):
So I mean, like I feel like when we're talking
about like we're not having a we're not having an
everything bubble.
Speaker 3 (04:12):
Everything bubble would mean everything.
Speaker 5 (04:14):
Like am I in a bubble?
Speaker 2 (04:15):
Like I feel like I'm Austin Power's like, help, I'm
in a nutshell?
Speaker 1 (04:18):
Like?
Speaker 5 (04:19):
Is that me in a bubble?
Speaker 3 (04:20):
Right now? Like?
Speaker 4 (04:21):
Sixteen thirty six, by the way, was the Dutch tulip bubble?
I was off by two hundred years, So.
Speaker 3 (04:25):
It is pretty bad. I'm sorry.
Speaker 5 (04:27):
How is this piece even defining everything bubble?
Speaker 3 (04:33):
Real?
Speaker 4 (04:33):
Estate, crypto, artificial intelligence, stocks, every other stock. But again,
like if you want to go through the five hundred
companies in the S and P five hundred, I do
think you will find a few of them at least
that are reasonably priced compared to their long term average.
So no, I don't think we're in an everything bubble.
Speaker 5 (04:53):
So let's just knock off a few of these just
right off the bat. Housing is not a bubble. The
prices are unaffordable.
Speaker 3 (05:02):
That does make it a bubble.
Speaker 5 (05:04):
Bubble implies that it has to pop in a kind
of violent fashion, and I just don't see that happening
with housing. I could see like some sideways drift for
a few years, But just because something's unaffordable doesn't make
it a bubble. The next one that I want to
address is crypto. If the default state of something is
(05:26):
a bubble, can it ever actually be in a bubble?
Because this is what crypto does. It goes through these
massive run ups for a couple of years, then massive
draw downs, then massive run ups like that's just the
state of nature with it, Like you wouldn't you know,
get upset at a cheetah for chasing the gazelle? Do
(05:47):
you get upset at crypto for going up and down crazily,
since it's not tethered to anything real.
Speaker 4 (05:55):
No, I'm just trying to think if there's been any
other asset class similar to it in that way, but
I ruggle to think of one. I'm sure there's some
emerging market countries stock prices that have seen something similar,
but I hesitate to come up with it.
Speaker 5 (06:07):
So like crypto, I just like, except hey, it's gonna
have crazy swings. Some of them are up, some of
them are down. It can't be a bubble because there
is no intrinsic value, there's no earnings per share.
Speaker 4 (06:18):
Investors aren't divided on this subject from which perspective that.
Speaker 3 (06:22):
We're in in everything bubble? They're not.
Speaker 4 (06:24):
No, the same as is saying that they're divided. But oh,
investors are not divided on whether or not we are
in a everything bubble.
Speaker 3 (06:32):
No.
Speaker 4 (06:32):
Investors right now are concerned that we may be in
an artificial intelligence and related companies bubble.
Speaker 5 (06:39):
We could be in a something bubble, but not in
everything bubble.
Speaker 3 (06:42):
Yeah, I mean, am I missing something here? No?
Speaker 4 (06:46):
Like yeah, bond prices, I guess a lot of different
asset prices have inflated, but that is very typical of
a period of time where you've seen dramatic stock price appreciation.
Like the junk to treasury yield spread is pretty narrow,
meaning people are not pricing in a whole lot of
risk for junk bonds. Does that mean that it's a
(07:10):
bubble like nothing we've ever seen, as the everything bubble
term would insinuate, I don't. I don't even fundamentally understand
what this means and what people would be divided by.
Speaker 5 (07:20):
I don't feel even that we are more bubblicious than
we were at the end of twenty twenty one. As
an example, like yes, in terms of scale, if AI
turns out to be a horrible, you know, a horribly
bad allocation of capital from a scale perspective, it would
(07:40):
dwarf anything else that we've seen.
Speaker 4 (07:43):
It's a really good point, Chuckley. Just think back to
twenty twenty one. It did feel more ludicrous than at
least it to twenty twenty five. There is a narrative
to attach to the fantastic prices that we are seeing everywhere.
Speaker 5 (07:58):
Something Austin could come out of.
Speaker 4 (08:00):
In twenty twenty one, there was nothing. It was just
we have too much money, and we are willing to
gamble on anything from South Korean baseball to meme stocks.
Speaker 2 (08:10):
You want to push a truck down a hill, there's
a stock for that you want to you know, like again,
a lot of them.
Speaker 3 (08:18):
Back Mania, like all of that stuff.
Speaker 4 (08:21):
There was no semblance of any I guess the best
argument you could have was that EV's were going to
be like seventy percent of the world's fleet of cars.
Speaker 5 (08:29):
But even there, like you and I had these conversations
in twenty one where we said, guys, there's a reason
why no one starts car car companies. They are literally
money pits. Yeah, it's a hole that you dig in
the ground, you put all of your money into it,
and there's like a one percent chance that you get
(08:50):
any of it back. And it's like, it was very
obvious that you couldn't actually make that much money on
EV's on artificial intelligence, there's a non zero chance that
you can't make any money on it. Hold on, there's
there's a real chance.
Speaker 3 (09:10):
Chance that you can make no money.
Speaker 5 (09:11):
There's a chance you can make no money on it. Sure,
but I do acknowledge, Hey, if you can actually do
some of the things that you're talking about. Sure, it's
a multi trillion dollar market.
Speaker 3 (09:22):
Yep.
Speaker 5 (09:23):
And so I understand why you somewhere between the car
companies made no sense yea, And we said it at
the time. It's like, guys, who's gonna buy all this stuff?
Speaker 3 (09:33):
Right?
Speaker 5 (09:34):
This It's kind of like, Yeah, if you could actually
invent a robot that you know, you can sell for
x thousands of dollars and it does all of your
household chores for you, I could see the market for that.
Speaker 3 (09:47):
Yeah.
Speaker 4 (09:47):
If you have an artificial intelligence that is so good
at gleaning data that it allows you to come up
with new drug combinations to treat diseases that we can't
currently figure out use for that, wow, yeah, that could
be a huge market.
Speaker 3 (10:00):
Look at what we're seeing already with weight loss drugs.
Speaker 4 (10:02):
Imagine if it could do stuff with other things because
of artificial intelligence being better at this than the current
tools we have.
Speaker 5 (10:09):
So if you've got to roll backs at least story
eight hammers at once and finish a house in a day, yep. Okay,
Like I get the use for that. In twenty twenty one,
it was just like all insane stuff. This stuff might
end up being not real, but you understand the draw
to this in a better way than just hey, like,
(10:33):
here's I mean, what wasn't twenty twenty one when stuff
like dose coins started and it was just like, yeah,
here's a picture of a dog. Yeah, on like a meme.
Speaker 4 (10:42):
Coin or what were the uh art artwork, the digital artwork?
Speaker 3 (10:47):
NFTs?
Speaker 5 (10:48):
Oh yeah, there was the NFT peak. Yeah, but I
mean the counter to this is like you got la
boo boos now or is it labu boos, la boo boos,
la boo boos?
Speaker 3 (10:57):
Yeah, yeah, yeah, boh.
Speaker 5 (11:01):
It's hard to like, I put this in a different
bucket from twenty one because twenty one was just a
bunch of things untethered from reality. This is a bunch
of things that may change reality. We're just not sure if.
Speaker 3 (11:12):
They will yet.
Speaker 5 (11:13):
Let's take a quick break when we come back, let's
do a little bit of trivia and are we gonna
do blue Owl or they affordability crisis?
Speaker 3 (11:22):
Michael?
Speaker 5 (11:24):
Why not both? Right after this?
Speaker 1 (11:27):
Here the Financial Exchange every day from eleven to noon,
Non serious XM's Business Radio Channel one thirty two. Keep
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(11:49):
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Speaker 6 (12:00):
Segment of the Financial Exchange is powered by Circle K
Convenience Stores. Circle K is now the official convenience store
of the dav Department of Massive chusetts On behalf of
Circle K. Thank you veterans for all you've done. Time
for trivia here on the Financial Exchange. In today's the
(12:20):
eighty fourth birthday of the Beatles. Original drummer Ringo Star
didn't join the band until the group returned from their
two year residency in Hamburg, Germany, where excuse me when
their original drummer was fired. So trivia question today, who
is the first drummer for the Beatles? Once again? Who
is the first drummer for the Beatles?
Speaker 5 (12:44):
Uh?
Speaker 6 (12:44):
Be the sixth person today to text us at six one, seven, three, six,
two thirteen eighty five with the correct answer, and you
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(13:07):
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Speaker 5 (13:20):
I guess the headline writers are just pulling out all
the stops today. We got this one from Bloomberg. Blue
Owl is the sum of all investor fears. Okay, so
here's the deal. Blue Owl is an asset manager. They
managed about three hundred billion dollars.
Speaker 3 (13:35):
I was gonna say that, isn't that the name of
a famous movie.
Speaker 4 (13:37):
It was the Faust movie, a famous famous book, right,
some of all for Ben Affleck.
Speaker 3 (13:42):
Yeah, yeah, I think it's sucked Tom Clancy.
Speaker 5 (13:44):
Okay, it's a very c plus Tom Clancy movie. Like,
there's much better ones if you want to go like
clear in Present Danger or something like that. Anyways, I
digress blue Owl. They manage about three hundred million dollars.
About half of that is in the private credits space,
which basically means that they make loans to companies that
are not through public facing bond markets. And I'll just
(14:07):
quote here from Bloomberg because I do think they actually
sum it up well. Blue Owl Capital has caught into
trifective market worries about private credit, artificial intelligence, and the
flightiness of wealthy individuals who have been the new growth
hope for alternative managers in recent years. The reason why
that last one matters typically private credit space kind of
the exclusive domain of pension funds insurers, but made.
Speaker 3 (14:30):
It more money. So where do they go?
Speaker 5 (14:32):
They said, yes, we want to, you know, start tapping
you know, wealthy individuals, same way that private equity firms
have and hedge funds and so on and so forth,
and now they're trying to put it into your four
O one k. Ultimately, what we have here is a
question of do the companies that Blue Owl and subsidiaries
(14:52):
and other people have lent to do those companies have
enough money to pay back the debt they've taken out Right,
There have been a couple of high profile ins instances
where firms funded by private credit have not been able
to in recent months, mostly in the auto sector, but
there was one in the housing sector as well. And
so you've kind of got this drum beat out there
(15:12):
where no one's quite sure what all this stuff is worth.
It's compounded by a couple of other bankruptcies in the
defaults in the last month or so in this space
where companies were having their loans fully valued by their
issuers right up until the day when they said, nope,
you can't pay anything, and we're actually going to write
(15:33):
this down to zero.
Speaker 4 (15:34):
Right, So you can to some degree understand the frustration
by the CEOs in this space. At Blue Owl, for instance,
the average annualized credit losses are running at zero point
one three percent of total loans, and so one of the.
Speaker 3 (15:48):
CEOs is out there. They have co CEOs at Blue Owl,
and you know.
Speaker 4 (15:51):
Kind of giving these exasperated speeches of why did the
narrative turn here?
Speaker 3 (15:55):
There's no real problem, YadA.
Speaker 4 (15:57):
YadA also acknowledging for a moment that his company only
works if they do have a market to continue to
lend out new money and buyers for that debt. So
he's got some in vested interest in making sure that
this gravy train continues. But to his point, there have
been very few defaults in this space. There is you know,
generally no aggregate looming issue, but when you have for
(16:24):
really public defaults, and it can quickly change the narrative
over to this being a real problem. And so, as
we said before, it's going to take some time to
kind of figure out. But for some time, these companies
have been claiming to their investors and to the general
public that they are just much better at underwriting than
(16:47):
previous issuers of this type of debt. And I think
that that statement has been called into question with some
of these big defaults that Blue Owl, by the way,
wasn't really connected to in any way.
Speaker 5 (16:58):
No, I think here's the question that I think is
worth asking. Then, if you're actually that good at underwriting
this debt, and if the default rate is that low,
then why are the interest rates that are charged to
the companies borrowing through private credit markets in the low
double digits right now? Because if there really isn't that
(17:21):
much risk in them, then why do you have to.
Speaker 4 (17:25):
Underwrite money of borrowers willing to Why were plenty of lenders?
Speaker 5 (17:28):
Why will more lenders lend to these companies at seven
eight nine percent instead of twelve thirteen fourteen percent. That's
the one that's out there and that I have a
hard time getting my head around, which is, yeah, if
it's really if you're really that good at it, why
is the market pricing it as if it's still kind
of junkie debt.
Speaker 4 (17:49):
I don't think you're a monopoly. You're not the only
place that can go lend out money to small borrowers.
Speaker 5 (17:53):
No, there's dozens of these companies that do this. You know,
even at this scale, there's there's dozens of these companies
that do this. Everyone's talking about the affordability crisis. It
can't be solved. I agree with this piece from Greg Yep.
The tools that governments use in order to manage their
constituencies or either's local, state, or federal level. We do
(18:18):
not have tools to make things more affordable. No, we don't,
and I take it back, we do. The tool to
make things more affordable is competition and allowing companies to
have to compete on price in order to make things
(18:38):
more I was going to say, or raise wages, which
makes things more affordability.
Speaker 4 (18:42):
Is a contributing factor of two things, prices and wages. Yes,
and I would argue trying to lower prices or hold
them where they are can't do. It is a hell
of a lot more difficult than trying to create conditions
under which wages can increase.
Speaker 5 (18:55):
Competition raises wages and lowers prices because you have to
compet for labor and you have people that you're competing
against on price.
Speaker 3 (19:04):
But it's easy to get confused about that.
Speaker 4 (19:06):
And so we're going to probably test some of the
dumb policies that we've had before, such as twenty dollars
fast food minimum wages, and rent control and all sorts
of fun things which I heard, by the way, is
making it onto the Massachusetts ballot some rent control measures
here in the States. So exciting news to come.
Speaker 5 (19:24):
Let's take a quick break.
Speaker 2 (19:25):
When we come back, we've got Wall Street Watch, We've
got the trivia answer, and then we'll discuss whether the
real poverty line is one hundred and forty thousand dollars
in income.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio every day,
it's the Financial Exchange on the Financial Exchange Radio Network.
Speaker 7 (19:49):
We're proud to announce that circle K is now the
official convenience store of the dav Department of Massachusetts. At
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(20:12):
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Speaker 1 (20:20):
Time now for Wall Street. Watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (20:32):
All after last week's shoppy ride, markets are beginning the
holiday shortened week well into positive territory as traders away
more economic data releases, including the Producer Price Index in
retail sales. Right now, Dow is up over half a percent,
or two hundred and sixty points, SMP five hundred is
up one point four percent or ninety one points, Nasdaq
(20:55):
surging two point three percent higher or five hundred and
seventeen points, RUSTED to two thousand is up nearly one
and a half percent, Tenure Treasure realed is flat at
four point zero five four percent, and crude oil up
about half a percent, treading just above fifty eight dollars
a barrel test. The CEO Elon Musk posted t X
(21:16):
that the company has started work on the next generation
of AI chips to be used in cars and data center,
sending Tesla shares up by seven percent. Now sticking with
AI where Alphabet stock is rallying nearly five percent following
glowing reviews of its recently launched Gemini three AI model. Meanwhile,
Ali Baba stock is almost five percent higher after the
(21:38):
company announced its AI app Quinn, had ten million downloads
within its first week of launching. Elsewhere, Nova Nord Disk
shares sinking about six percent after the pharmaceutical company said
it's highly anticipated trial for Alzheimer's disease failed to meet
its main goal and struggling retailer Coals named Michael Bender
as its new CEO, marking the third CEO the department
(22:01):
store has had in the last three years. Bender has
been serving as the company's interim CEO since May. Colestock
is now edging higher. I'm Tucker Silva and that is
Wall Street Watch. And in the previous segment we asked
you the trivia question who was the first drummer of
the Beatles? Well, that would be Pete Best and our
(22:23):
winner today was John from Portsmouth, Rhode Island, taking on
the Financial Exchange Show t shirt. Congrats to John, and
we played trivia every day here in the Financial Exchange
See complete contest rules at Financial Exchange Show dot com.
Speaker 5 (22:37):
All right, Mike, we have to have a conversation about
the federal poverty line.
Speaker 3 (22:43):
Yeah, we might need to find.
Speaker 4 (22:46):
What poverty actually means as part of this, but the
federal government does produce a level of income where you
are considered impoverished.
Speaker 5 (22:56):
Yes, and that uh, basically that limit if you look
at it, it varies based on family size, as you
would expect. Sure, if you are a just single individual
living on your own, it's below fifteen six hundred and
fifty dollars this year. If you have if you're married
or it's two of you living together, it's about twenty
(23:16):
one thousand. If you have twelve kids, it's about eighty
seven thousand. Not many twelve kid households these days, so
it's probably in the minority. But basically the federal poverty
line is it's defined basically so as to you know,
have it's the minimum income level to meet some basic
(23:38):
needs such as food, housing, and healthcare and it gets
updated annually.
Speaker 4 (23:43):
And not coincidentally, the federal minimum wage at seven dollars
twenty five cents per hour, if you worked a full
forty hour week for fifty two weeks a year, would
get you about fifteen thousand dollars in income.
Speaker 5 (23:54):
So there is a manager at Simplify Asset Management by
name of Mike Green. I'm familiar with Mike's work, and
I think he's generally a pretty sharp guy actually, but
he basically looked at a bunch of different data points
and said, no, if we're actually looking at what this
(24:17):
you know should be defined as that limit is closer
to one hundred and forty thousand dollars, and I just
don't think that that holds up when you, you know,
actually look at this.
Speaker 4 (24:30):
I am willing to say that at thirty thousand dollars
a year, which is that's the level for the family
of four, right was around thirty.
Speaker 5 (24:38):
Uh yeah, for let me pull it up for thirty
Oh yeah, it's thirty thirty two thousand.
Speaker 4 (24:43):
I'm willing to say that even under forty or fifty
thousand dollars in most parts of the country, as a
family of four, you are impoverished at levels of income
higher than thirty two thousand dollars, I'm really not willing
to get to the one hundred and forty thousand dollars level.
Speaker 5 (24:56):
No, And here's why, in my opinion, it doesn't make sense. First, like,
you look at the stuff that is included in here,
and just as an example, thirty two thousand dollars a
year for childcare. There is no world in which that
is what you need to spend on childcare year after
(25:18):
year after year.
Speaker 4 (25:21):
Likewise, if you are spending if you are earning thirty
two thousand dollars a year in income, there's almost no
way that you are choosing to engage a childcare provider.
Speaker 5 (25:32):
Correct, you will just stay alone and not work. Twenty
three thousand, two sixty seven for housing. That's two thousand
dollars a month in rent. I can tell you in
some parts of the country it's going to be really
hard to find a place for under two thousand a
month in rent. In large swaths of it, you can
absolutely find a place for under two thousand dollars a
(25:52):
month in rent. Fourteen seven hundred and seventeen for food,
And again this was looking at a family of four
about one thousand dollars twelve hundred dollars a month, we'll
call it, so about three hundred dollars a week. Guys,
I gotta tell you, I do my grocery shopping for
my family every single week, and without like, without having
(26:14):
to manage things tightly, and we're a family of four,
we're generally right around that level. If I wanted to
actually like coupon clip and bargain hunt and really do
some work on it, I could get that down by
at least thirty percent.
Speaker 3 (26:31):
In either case.
Speaker 4 (26:32):
And by the way, I'm taking Massachusetts data here as
an example for a four person household. If you're earning
less than fifty two hundred dollars a month, then you
qualify for SNAP benefits. And so we have some you know,
government intervention here that's confusing this matter further.
Speaker 5 (26:48):
Another one fourteen and twenty eight for transportation. Guys, I
can tell like, again, this might be the average spending
that you see out there, because again this was national
average data. Below the national average is not poverty. There's
another like line before you get there, ten thousand dollars.
Speaker 4 (27:07):
By the way, that fourteen thousand number is one absolutely
impacted by you know, the average price for a new
car correct which.
Speaker 5 (27:16):
Or even a car in general, there are like, there
are plenty of ways to get transportation in many parts
of the country that don't involve buying a new car.
It might be as simple as a bus pass free,
you know, each month. That might be a couple hundred
bucks or something, or a train pass each month for
a few hundred dollars, like you, it does not have
to be fourteen fifteen thousand dollars for transportation ten thousand
(27:41):
for healthcare. Like honestly, no one knows the cost of healthcare.
I'm not going to put up a fight there if
you want to tell me that that's you know what
it is when you include all your deductibles and out
of pocket and this and that.
Speaker 4 (27:49):
I'll say that according to Fidelities annual study that they
do on retirees, that a single individual who's retired is
expected to spend some six thousand plus dollars a year
you're on healthcare, So it wouldn't surprise him buy that
that ten thousand dollars for a family of four would
be the kind of bare minimum.
Speaker 5 (28:06):
And then you know, twenty two thousand for other essentials.
I'm guessing that's, you know, clothing, and I don't know
how you get to twenty thousand for other essentials like.
Speaker 3 (28:17):
That.
Speaker 5 (28:17):
Seems like a lot for essentials.
Speaker 3 (28:19):
Yeah.
Speaker 5 (28:21):
In any case, if we want to make an argument, hey,
the federal poverty line for a family of four should
be fifty thousand instead of thirty, I think we can
have a reasonable conversation there. One hundred and forty thousand,
I don't think we can have a reasonable conversation.
Speaker 4 (28:39):
Yeah, seems a little bit off. It does remind me
of a point, though, Chuck, that I know you and
I have talked about at length, which is there's always
in everyone's circle like keeping up with the Joneses mentality,
and we see that expense.
Speaker 3 (28:55):
Creep with clients that we work with all the time.
Speaker 4 (28:58):
And I've said this publicly a few times, where I
have met families who are pulling in half a million
dollars or more and are in terrible financial health. They
don't save anything, they rack up debt, they are not
going to save enough to retire on. And I've met
families that have earned at most one hundred thousand dollars
(29:21):
a year and are in excellent financial health without long
term debt without credit card debt, and enough savings in
the retirement to afford their lifestyle. And that's where it
comes down to that discipline and that understanding of what
your future is going to look like to save properly
for that future. If you are trying to assess where
you are in that saving journey that we all have
(29:45):
to embark on in our working years, and you're trying
to figure out, Hey, what is my dollar amount that
I need to get to.
Speaker 3 (29:50):
What is my age that I need.
Speaker 4 (29:52):
To get to before I can afford to pull back
from work and retire and live comfortably for the rest
of my life. That's what Armstrong Advisory Group does every
day when working with our clients. If you have those
types of questions, I urge you to call us at
eight hundred three nine three for zero zero one and
get your free financial check up. The number again for
the Armstrong Advisory Group eight hundred three nine three for
(30:14):
zero zero one.
Speaker 1 (30:15):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax and to state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services.
Speaker 5 (30:31):
Let's see, I kind of like this piece here how
spouse is retiring at different times can avoid money clashes
because I've seen this first hand. Actually with you have
a couple who you know, someone seventy five, someone is
sixty two in the relationship, and the seventy five year
old is quite literally in some cases, being like, hey,
(30:54):
I'm gonna die soon. We got to spend some money.
Speaker 3 (30:57):
Yeah, And the sixty two.
Speaker 5 (30:58):
Year old is like, I might have third so you're
forty years left. I don't want to be broke.
Speaker 4 (31:03):
Yeah, the you have to be Look, it's not to
interject myself into spouses into a couple's life, but there
are added risks when you are i would say, marrying
somebody that is greater than five years your age difference. Yeah, right,
Like you think about that example, and I've seen it before. Right,
(31:25):
the older spouse has a pension. How much homework did
you do to make sure that there's a survivor benefit
on that pension or if they were the primary income
earn or when their social Security goes away, that I'm
going to have something left over. It's a little bit
easier these days with investments making up a larger portion
of it. Sure, but there's a lot of those types
of questions that don't apply to a couple that's both
(31:47):
turning sixty five the same year. The other one that
I always ask people when there's an age difference and
somebody's retiring, it's how comfortable are you, uh, with seeing
your spouse.
Speaker 3 (31:59):
Not go to work every day?
Speaker 4 (32:01):
Because that's a that's a challenge when that spouse is,
you know, heading to the golf course or spending time
with the grandkids and you can't because you're commuting to work.
Speaker 3 (32:08):
It's a real pain point in some relationships.
Speaker 5 (32:11):
Oh, I mean I never went through that, but I
can tell you it as like a twenty five year
old you know, a couple of roommates at the time,
and one summer they both got into business school and
took the summer off and I'm still working. I'm kind
of looking at them and I'm like, they're literally just
like going and again, like hanging out at the beach
day and I'm sitting there, I'm like, guys, I don't
(32:35):
think we can do this long term. This isn't gonna work,
So yeah, I can. I can relate to that a
little bit. Just take a quick break when we come back.
Stack Roulette.
Speaker 1 (32:44):
Finding daily interviews and full shows of the Financial Exchange
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This is the Financial Exchange Radio Network. The Financial Exchange
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(33:06):
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That's the Financial Exchange weekdays from eleven to noon on
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Speaker 6 (33:28):
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Speaker 5 (34:03):
Mike, what do you got for stack roulette?
Speaker 4 (34:05):
I keep seeing all these pieces about the California twenty
dollars fast food minimum wage law and people trying to
study the effects. The California fast food minimum wage law,
if you're not familiar, applies to any fast food company
that maintains at least sixty restaurants, so pretty much all
of them past in twenty twenty three, went into effect
(34:27):
in April of twenty twenty four, and so like.
Speaker 3 (34:31):
As early as.
Speaker 4 (34:31):
January this year, I started seeing pieces like, oh, this
is how many jobs. Yeah, the new minimum wage law
has killed. I do suspect it is going to kill jobs.
You can't measure it yet, it's not long enough. You
have to give a time to actually be measured. There's
been some studies, you know, showing that there hasn't been
any spillover to other industries. I find that to be
(34:53):
pretty useless as well. Basically saying that you know, it
hasn't driven up wages at full service restaurants. The only
thing that they've able to been able to distinguish so
far is that workers at these restaurants there seems to
be less turnover. Unsurprising, Yeah, but I do suspect. Yeah, overall,
five years from April of twenty twenty four, will there
(35:15):
be fewer fast food workers per dollars spent on fast food? Absolutely,
But again you have to measure these things in an
intelligent way, because it's not if the population of California
goes up another ten percent between now when you measure it,
there could still be more workers and fast food in
spite of the new law.
Speaker 5 (35:33):
I want to talk about this piece that Tucker dug
up from the New York Times, and Ai toy Bear
speaks of sex knives and pills at Consumer Group warns, Okay,
we've ordered them for the entire the Christmas gifts, Yes,
Christmas gifts for the entire production staff.
Speaker 3 (35:49):
How much of these things cost?
Speaker 5 (35:50):
Could they ninety nine dollars?
Speaker 4 (35:52):
Okay, so it's not it's gonna be a little bit
too expensive for you guys to afford for a trivia
contest winner.
Speaker 1 (35:56):
Huh.
Speaker 5 (35:57):
But here's the thing, Like, we got a couple things
to talk about this, starting with the fact that one
of these toys, it's a plush rocket with the removable speaker.
Speaker 4 (36:06):
It's called grock and it's designed for kids age three
to twelve.
Speaker 5 (36:10):
I'm sorry, we got to stop naming everything grock. That
is artificial intelligence. There's at least four platforms that I
know of, including this, that are using it. So it's
Elon Musk's so Elon Musk has one.
Speaker 2 (36:21):
There's another AI platform, there's this, and there's another toy
that I forget what it does.
Speaker 5 (36:27):
But here's the deal you got, Like, if all of
you are gonna name your toys groc and all your
platforms grock, you're basically proving that there is no real
creativity and artificial intelligence because you're literally just pulling a
term from a Robert Heinland novel and using it as
your own because you have no originality. Yes, so grow
(36:48):
up or do better either. One beyond that, if your
AI plush toy, you know, starts talking to kids about
you know, taking pills, knives and sex and stuff like that,
you probably haven't done enough work to make sure that
it's actually.
Speaker 4 (37:08):
Good I'll go a step further and say, parents, if
you are buying your three to twelve year old an
AI based toy, don't you are idiots? I'm no, no, Okay,
this technology came out a year ago, nobody has any
idea what it means. No, I'm gonna step up here,
(37:29):
chuck and say you should not be giving your minor
children access to a new piece of technology that everyone
seemingly understands the potential downsides of. It's true, like in
nineteen it's not like this is something that we have
no science fiction history about.
Speaker 5 (37:47):
It's true.
Speaker 2 (37:47):
In nineteen eighteen, you would have been like, hey, kid,
here's your first car.
Speaker 4 (37:51):
Like you know, yeah, I'm willing to go out on
a limb on this one. Bad parenting if you're buying
this thing for your kids. Yeah, it's probably not a
perfect parent over here, but I have some guardrails in place.
Speaker 5 (38:07):
So it's true. You probably don't want to buy a
completely untested technology toy for your kid, for your minor
child at age five.
Speaker 3 (38:16):
You know.
Speaker 4 (38:16):
It's like if you have a conversation with sixteen year
olds when we got there, all right, Yeah, it's I'm
a big believer.
Speaker 5 (38:23):
Once you get into your teens, like you basically should
like let them figure out anything that they need to
because like they're going to be, you know, going out
of the house soon. But yeah, at age five, I
could see how maybe a hard no is is warranted
on this. That's that's that's fair. Let's take a quick
break for the rest of the day.
Speaker 2 (38:40):
Dow was up two hundred and thirty points, S and
PS up eighty eight, NASDAG up five forty eight, stretching
its legs.
Speaker 5 (38:45):
We'll stretch ours too, and we'll see you tomorrow.
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